Form 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of April 2005
Commission File Number: 001-06439
SONY CORPORATION
(Translation of registrant's name into English)
7-35 KITASHINAGAWA 6-CHOME, SHINAGAWA-KU, TOKYO, JAPAN
(Address of principal executive offices)
The registrant files annual reports under cover of Form 20-F.
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F,
Form 20-F X Form 40-F __
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934,
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):82-______
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SONY CORPORATION
(Registrant)
By: /s/ Katsumi Ihara
(Signature)
Katsumi Ihara
Executive Deputy President,
Group Chief Strategy Officer and
Chief Financial Officer
Date: April 27, 2005
List of materials
Documents attached hereto:
i) Press Release announcing Consolidated Financial Results for the Fiscal Year
Ended March 31, 2005
No: 05-025E
3:30 P.M. JST, April 27, 2005
Consolidated Financial Results
for the Fiscal Year Ended March 31, 2005
Tokyo, April 27, 2005 -- Sony Corporation today announced its
consolidated results for the fiscal year ended March 31, 2005 (April
1, 2004 to March 31, 2005).
(Billions of yen, millions of U.S. dollars, except per share
amounts)
Year ended March 31
2004 2005 Change in 2005*
Yen
---------------- ------ ------ ------ ------
Sales and operating Y7,496.4 Y7,159.6 -4.5% $66,912
revenue
Operating income 98.9 113.9 +15.2 1,065
Income before income 144.1 157.2 +9.1 1,469
taxes
Equity in net income 1.7 29.0 +1,594.2 271
of affiliated companies
Net income 88.5 163.8 +85.1 1,531
Net income per share
of common stock
- Basic Y95.97 Y175.90 +83.3% $1.64
- Diluted 87.00 158.07 +81.7 1.48
* U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of Y107=U.S.$1, the approximate Tokyo foreign
exchange market rate as of March 31, 2005.
Unless otherwise specified, all amounts are on the basis of Generally
Accepted Accounting Principles in the U.S. ("U.S. GAAP").
Consolidated Results for the Fiscal Year Ended March 31, 2005
-------------------------------------------------------------
Sales and operating revenue ("sales") decreased 4.5% compared with
the previous fiscal year; on a local currency basis sales decreased
3%. (For all references herein to results on a local currency basis,
see Note I.) This reflects both the establishment of Sony BMG Music
Entertainment ("Sony BMG") (please refer to note) and a change in
revenue recognition method at Sony Life Insurance Co., Ltd.
("Sony Life").
Sales within the Electronics segment remained largely unchanged.
Although sales of flat panel televisions, digital still cameras and
LCD rear projection televisions increased, there was a decrease in
sales primarily of CRT televisions and portable audio products. In
the Game segment, an increase in software sales was more than offset
by a decline in hardware sales mainly due to strategic price
reductions, resulting in a decrease to overall segment sales. In the
Music segment, although sales at Sony Music Entertainment (Japan)
Inc. ("SMEJ") increased, overall sales decreased due to the fact that
Sony BMG, a recorded music business joint venture formed with
Bertelsmann AG, has been accounted for by the equity method since
August 2004 (please refer to note). In the Pictures segment, despite
the strong contribution of Spider-Man 2, there was a decrease in
sales as a result of the appreciation of the yen. In the Financial
Services segment, revenue decreased mainly due to a decrease in
revenue from insurance premiums at Sony Life.
Operating income increased 15.2% (a 26% increase on a local currency
basis) compared with the previous fiscal year.
In the Electronics segment, the operating loss increased mainly due
to a continued deterioration in the cost of sales ratio associated
with a decline in unit selling prices. In the Game segment, as a
result of a decline in hardware sales, there was a decrease in
operating income. The Pictures segment had record operating income
primarily due to the substantial contribution from Spider-Man 2.
Restructuring charges, which are recorded as operating expenses,
amounted to Y90.0 billion ($841.1 million) for the fiscal year
compared to Y168.1 billion in the previous fiscal year. In the
Electronics segment, restructuring charges were Y81.8 billion ($764.5
million) compared to Y147.8 billion in the previous fiscal year.
Income before income taxes increased 9.1% compared to the previous
fiscal year. There was a deterioration in the net effect of other
income and expenses compared to the previous fiscal year despite an
improvement due to a smaller loss on the devaluation of securities
investments compared to the previous year, and gains of Y9.0 billion
($84 million) from a change in interest from Monex Inc., an equity
affiliate of Sony, following its business integration by way of a
share transfer with Nikko Beans, Inc., and total gains of Y4.7
billion ($44 million) from the sale of stock and a change in interest
in a subsidiary resulting from the initial public offering of So-net
M3 Inc., a consolidated subsidiary of Sony Communication Network
Corporation. This deterioration was mainly the result of the
recording of a net foreign exchange loss in the current fiscal year,
compared to the net foreign exchange gain recorded in the previous
fiscal year.
Income taxes: Compared to an effective tax rate of 36.6% in the
previous fiscal year, the effective tax rate was 10.2% in the current
fiscal year. As fully discussed in Sony's Annual Report on Form 20-F
for the fiscal year ended March 31, 2004, as a result of the
recording of operating losses in the past, the U.S. subsidiaries of
Sony have had valuation allowances against deferred tax assets for
U.S. federal and certain state taxes. However, in the current fiscal
year, based on both an improvement in recent years and a sound
outlook for the operating performance at Sony's U.S. subsidiaries,
Sony reversed Y67.9 billion ($635 million) of such valuation
allowances, resulting in a reduction to income tax expense. This
reversal was the major factor impacting the effective tax rate
decline for the fiscal year.
Equity in net income of affiliated companies increased Y27.3 billion
compared to the previous fiscal year. Sony Ericsson Mobile
Communications AB ("Sony Ericsson") contributed Y17.4 billion
($163 million) to equity in net income, an increase of Y11.0 billion
compared to the previous fiscal year. Equity in net income of
affiliated companies for the current fiscal year includes the
recording of Y12.6 billion ($118 million) as equity in net income
from InterTrust Technologies Corporation ("InterTrust"). This amount
reflects InterTrust's proceeds from a license agreement with
Microsoft Corporation arising from the settlement of a patent-related
lawsuit. In addition, an equity loss of Y3.4 billion ($32 million)
was recorded at Sony BMG, established in August 2004. Furthermore,
equity in net loss was recorded at affiliates such as Star Channel
Inc., a Japan-based subscription television company specializing in
the broadcast of movies, and S-LCD Corporation, a joint-venture with
Samsung Electronics Co., Ltd. for the manufacture of amorphous TFT
LCD panels.
Net income, as a result, increased 85.1% compared to the previous
fiscal year.
Operating Performance Highlights by Business Segment
----------------------------------------------------
Note: As of August 1, 2004, Sony and Bertelsmann AG combined their
recorded music businesses in a joint venture. The newly formed
company, Sony BMG, is 50% owned by each parent company. Under U.S.
GAAP, Sony BMG is accounted for by Sony using the equity method and,
since August 1, 2004, 50% of net profits or losses of this business
have been included under "Equity in net income (loss) of affiliated
companies."
In connection with the establishment of this joint venture, Sony's
non-Japan based disc manufacturing and physical distribution
businesses, formerly included within the Music segment, have been
reclassified to the Electronics segment to reflect the new management
reporting structure whereby Sony's Electronics segment has now
assumed responsibility for these businesses. Results for the previous
fiscal year in the Electronics and Music segments have been restated
to account for this reclassification.
In the Music segment, results for this fiscal year only include the
results of Sony Music Entertainment Inc.'s ("SMEI") recorded music
business for the months of April through July 2004, and the twelve
months results of SMEI's music publishing business and SMEJ. However,
results for the previous fiscal year in the Music segment include the
consolidated results for SMEI's recorded music business for all
twelve months, as well as the full year's results for SMEI's
publishing business and SMEJ.
Electronics
(Billions of yen, millions of U.S. dollars)
Year ended March 31
2004 2005 Change in 2005
Yen
------------------- ------ ------ ------ ------
Sales and operating Y5,042.3 Y5,021.6 -0.4% $46,931
revenue
Operating loss (6.8) (34.3) - (321)
Unless otherwise specified, all amounts are on a U.S. GAAP basis.
Sales remained largely unchanged (a 1% increase on a local currency
basis). Sales to outside customers decreased 1.1% compared to the
previous fiscal year. There was a decline in sales of CRT
televisions, due to a continued shift in demand towards flat panel
televisions, and portable audio, faced with a difficult competitive
environment due to the shift towards hard disc- and flash-based
memory players. However, there was an increase in sales of several
products including flat panel televisions, which saw increased sales
in all geographic areas, digital still cameras, where sales increased
outside of Japan, and LCD rear projection televisions, which saw
increased unit sales particularly in the U.S.
Operating loss increased by Y27.5 billion compared with the previous
fiscal year. Although there was a decrease in restructuring charges
compared with the previous fiscal year, operating loss increased due
to a significant deterioration in the cost of sales ratio as a result
of a decline in unit selling prices. With regard to products within
the Electronics segment, the decrease in sales of CRT televisions and
portable audio, as well as the decline of unit selling prices of
camcorders, contributed to the increase in operating loss.
Inventory, as of March 31, 2005, was Y514.4 billion ($4,807 million),
a Y18.4 billion, or 3.7%, increase compared with the level as of
March 31, 2004 and a Y56.5 billion, or 9.9%, decrease compared with
the level as of December 31, 2004.
Note: In association with the completion of business integration of
Sony Group's semiconductor manufacturing businesses in July 2004, it
was decided to account for semiconductor manufacturing operations
inventory, which was previously recorded in the Game segment, within
the Electronics segment as of the quarter beginning July 1, 2004.
(Regarding the integration of Sony Group's semiconductor
manufacturing operations, please refer to note 6.)
Game
(Billions of yen, millions of U.S. dollars)
Year ended March 31
2004 2005 Change in 2005
Yen
------------------- ------ ------ ------ ------
Sales and operating Y780.2 Y729.8 -6.5% $6,821
revenue
Operating income 67.6 43.2 -36.1 404
Unless otherwise specified, all amounts are on a U.S. GAAP basis.
Sales decreased 6.5% compared with the previous fiscal year (a 6%
decrease on a local currency basis).
Hardware: In addition to a decline of PlayStation 2 ("PS2") unit
sales in Japan, the U.S. and Europe, strategic price reductions on
the PS2 undertaken in each of the abovementioned territories resulted
in a decline in sales.
Software: Overall software sales increased mainly as a result of an
increase in unit sales of PS2 software, which recorded all-time
record sales. Revenue increased in Japan, the U.S. and Europe.
PlayStation Portable, on sale in Japan from December 2004 and in the
U.S. from March 2005, has recorded strong hardware and software unit
sales.
Operating income decreased by Y24.4 billion, or 36.1%, compared with
the previous fiscal year as a result mainly of a decrease in hardware
sales coupled with the start-up expenses for PlayStation Portable,
despite being partially offset by an increase in software sales.
Worldwide hardware production shipments:*
-> PS2: 16.17 million units (a decrease of 3.93
million units)
-> PS one: 2.77 million units (a decrease of 0.54
million units)
-> PlayStation Portable 2.97 million units
Worldwide software production shipments:*
-> PS2: 252 million units (an increase of 30
million units)
-> PlayStation: 10 million units (a decrease of 22
million units)
-> PlayStation Portable 5.7 million units
*Production shipment units of hardware and software are counted upon
shipment of the products from manufacturing bases. Sales of such
products are recognized when the products are delivered to customers.
Inventory, as of March 31, 2005, was Y77.5 billion ($724 million), a
Y53.4 billion, or 40.8%, decrease compared with the level as of March
31, 2004 and a Y32.1 billion, or 70.7%, increase compared with the
level as of December 31, 2004. (Regarding inventory, please refer to
the note in the above Electronics segment.)
Music
(Billions of yen, millions of U.S. dollars)
Year ended March 31
2004 2005 Change in 2005
Yen
-------------------- ------ ------ ------ ------
Sales and operating Y440.3 Y249.1 -43.4% $2,328
revenue
Operating income (6.0) 8.8 - 82
(loss)
The amounts presented above are the sum of the yen-translated results
of SMEI, a U.S -based operation which aggregates the results of its
worldwide subsidiaries on a U.S. dollar basis, and the results of
SMEJ, a Japan-based operation which aggregates results in yen. In
addition, please refer to the note regarding the establishment of
Sony BMG.
Sales decreased Y191.2 billion or 43.4% compared with the previous
fiscal year. Of the Music segment's sales, 62% were generated by SMEJ
and 38% were generated by SMEI. As noted above, due to the
establishment of the Sony BMG joint venture, there were no recorded
music sales at SMEI after July 31, 2004. Therefore, SMEI's results
are not comparable with results of the prior year.
SMEJ: Sales increased 6.9% compared with the previous fiscal year
mainly due to an increase in album and single sales. Best-selling
albums and singles during the year included musiQ by ORANGE RANGE,
SENTIMENTALovers by Ken Hirai and PORNO GRAFFITTI BEST BLUE'S by
Porno Graffitti.
Operating income at SMEJ increased significantly compared to the
previous fiscal year due to the higher sales noted above and an
improvement in the cost of sales ratio. As noted above, SMEI's
results are not comparable with the results in the prior year.
Pictures
(Billions of yen, millions of U.S. dollars)
Year ended March 31
2004 2005 Change in 2005
Yen
----------------- ------ ------ ------ ------
Sales and Y756.4 Y733.7 - 3.0% $6,857
operating revenue
Operating income 35.2 63.9 +81.4 597
The results presented above are a yen-translation of the results of
Sony Pictures Entertainment ("SPE"), a U.S.-based operation which
aggregates the results of its worldwide subsidiaries on a U.S. dollar
basis. Management analyzes the results of SPE in U.S. dollars, so
discussions of certain portions of its results are specified as being
on "a U.S. dollar basis."
Sales decreased 3.0% compared with the previous fiscal year (1%
increase on a U.S. dollar basis) due to the appreciation of the yen.
Sales, on a U.S. dollar basis, increased primarily due to higher
worldwide home entertainment, international television syndication
and worldwide theatrical revenues on films. Worldwide home
entertainment and international television syndication revenues were
higher as a result of the performance of prior year films including
50 First Dates, Big Fish and Bad Boys 2. For theatrical revenues, the
success of the current year film slate, particularly Spider-Man 2,
Hitch and The Grudge, more than offset the impact of releasing fewer
films this year. The higher sales from films were partially offset by
a decrease in television sales due to the absence in the current year
of several transactions that occurred in the prior fiscal year. These
included syndication sales of King of Queens and Seinfeld as well as
the extension of a licensing agreement for Wheel of Fortune.
Television sales in the current year benefited from the highly
successful DVD release of Seinfeld.
Operating income increased Y28.7 billion to Y63.9 billion ($597
million), compared with the previous fiscal year. This represented
record operating income for SPE. The large increase in operating
income is due to the strong overall performance of the current year
film slate and the home entertainment and international television
syndication carryover performance of the prior year films noted
above. Spider-Man 2's worldwide success contributed substantially to
this year's earnings offset somewhat by the disappointing theatrical
performance of Spanglish. Television's operating income decreased due
to the same factors noted above for revenue.
On April 8, 2005 a consortium led by Sony Corporation of America
("SCA") and its equity partners; Providence Equity Partners, Texas
Pacific Group, Comcast Corporation and DLJ Merchant Banking Partners
completed the acquisition of Metro-Goldwyn-Mayer Inc. ("MGM"). Under
the terms of the acquisition agreement the aforementioned investor
group acquired MGM for $12.00 in cash per MGM share, for a total
purchase price of approximately $5.0 billion. As part of this
transaction, SPE will co-finance and produce new motion pictures with
MGM as well as distribute MGM's existing film and television content
through SPE's global distribution channels. MGM will continue to
operate under the Metro-Goldwyn-Mayer name as a private company
headquartered in Los Angeles. As part of the acquisition, SCA
invested $257 million for 20% of the total equity capital. However,
based on the percentage of common stock owned, Sony will record 45%
of MGM's net income (loss) as equity in net income of affiliated
companies.
Financial Services
(Billions of yen, millions of U.S. dollars)
Year ended March 31
2004 2005 Change in 2005
Yen
----------------- ------ ------ ------ ------
Financial service Y593.5 Y560.6 5.6% $5,238
revenue
Operating income 55.2 55.5 +0.6 519
Unless otherwise specified, all amounts are on a U.S. GAAP basis.
Therefore, they differ from the results that Sony Life discloses on a
Japanese statutory basis.
Financial service revenue decreased 5.6% compared with the previous
fiscal year, mainly due to a decrease in revenue at Sony Life.
Revenue at Sony Life was Y474.3 billion ($4,433 million), a Y38.7
billion, or 7.5% decrease compared with the previous fiscal year. The
main reasons for this decrease were a change in the method of
recognizing insurance premiums received on certain products, as of
the third quarter beginning October 1, 2003, from being recorded as
revenues to being offset against the related provision for future
insurance policy benefits, coupled with a small decrease in valuation
gains in the current fiscal year compared to the previous year in
which significant valuation gains were recorded against stock
conversion rights from convertible bonds.
Operating income increased by Y0.3 billion or 0.6% compared with the
previous fiscal year, as a result of the recording of losses in the
previous fiscal year by Sony Finance International Inc., associated
with reorganization proceedings instituted by Crosswave
Communications Inc. under the Corporate Reorganization Law of Japan
during the same year. Operating income at Sony Life decreased by Y2.2
billion or 3.4% to Y61.0 billion ($570 million), mainly due to a
decrease in valuation gains against stock conversion rights from
convertible bonds, although this was partially offset by an increase
in revenue from insurance premiums excluding the effect of the change
in revenue recognition method noted above.
Other
(Billions of yen, millions of U.S. dollars)
Year ended March 31
2004 2005 Change in 2005
Yen
------------------- ------ ------ ------ ------
Sales and operating Y268.3 Y254.4 -5.2% $2,378
revenue
Operating loss (12.1) (4.1) - (38)
Unless otherwise specified, all amounts are on a U.S. GAAP basis.
Sales decreased 5.2% compared with the previous fiscal year. This was
primarily the result of a decrease in intersegment sales due to
contract changes at a Japanese subsidiary involved in the advertising
agency business.
An operating loss of Y4.1 billion ($38 million) was recorded,
representing an improvement of Y8.0 billion compared with the
operating loss of Y12.1 billion recorded in the previous fiscal year.
This improvement was mainly due to a reduction of fixed costs, a gain
from the sale of a retail and showroom building in Japan and the
strong performance of a business engaged in the production and
marketing of animation products during the current fiscal year,
although this was partially offset by the recording of a one-time
gain of Y7.7 billion by a business operated by a U.S. subsidiary on
the sale of rights related to a portion of the Sony Credit Card
portfolio in the previous fiscal year.
Operating Results for Major Affiliates Accounted for by the Equity
Method
------------------------------------------------------------------
The following operating results for significant companies accounted
for by the equity method are not consolidated in Sony's consolidated
financial statements. However, Sony believes that this disclosure
provides additional useful analytical information to investors
regarding operating performance. In addition, please note that the
operating results of Sony Ericsson discussed below are reported on an
International Financial Reporting Standards basis, and thereby differ
from the operating results reported on a U.S. GAAP basis contained
within Sony's equity in net income of affiliated companies.
Furthermore, as Sony Ericsson and Sony BMG report their results on a
calendar year basis, the operating results presented below have been
adjusted according to Sony's fiscal year.
Sony Ericsson recorded sales for the one year period ended March 31,
2005 of Euro 6,475 million, representing a Euro 1,269 million or 24%
increase compared to the same period of the previous year. Income
before taxes was Euro 460 million, a Euro 380 million increase
compared to the same period of the previous year, and net income of
Euro 267 million was recorded, a Euro 167 million increase compared
to the same period of the previous year. Sony Ericsson experienced a
strong year led by consumer demand for mid and high-end GSM models.
As a result, equity in net income of Y17.4 billion ($163 million) was
recorded by Sony.
Sony BMG recorded sales revenue of $3,258 million, loss before income
taxes of $53 million, and a net loss of $66 million during the period
that the venture began operations on August 1, 2004 through the end
of Sony's fiscal year. Loss before income taxes includes $290 million
of restructuring charges. As a result, equity in net loss of Y3.4
billion ($32 million) was recorded by Sony.
Cash Flow
The following charts show Sony's unaudited condensed statements of
cash flows on a consolidated basis for all segments excluding the
Financial Services segment and for the Financial Services segment
alone. These separate condensed presentations are not required under
U.S. GAAP, which is used in Sony's consolidated financial statements.
However, because the Financial Services segment is different in
nature from Sony's other segments, Sony believes that these
presentations may be useful in understanding and analyzing Sony's
consolidated financial statements.
Cash Flow - Consolidated (excluding Financial Services segment)
---------------------------------------------------------------
(Billions of yen, millions of U.S. dollars)
Year ended March 31
Cash flow 2004 2005 Change in 2005
Yen
---------------- ------ ------ ------ ------
- From operating Y401.1 Y485.4 Y +84.3 $4,537
activities
- From investing (352.5) (472.1) -119.6 (4,412)
activities
- From financing 153.8 (95.4) -249.1 (892)
activities
Cash and cash 438.5 592.9 +154.4 5,541
equivalents at
beginning of the
fiscal year
Cash and cash 592.9 519.7 -73.2 4,857
equivalents at end
of the fiscal year
Operating Activities: During the fiscal year ended March 31, 2005,
although there was an increase in notes and accounts receivable,
trade mainly within the Game segment, in addition to the recording of
net income, excluding depreciation and amortization primarily within
the Pictures and Game segments, there was a decrease in inventory
within the Electronics and Game segments and an increase in notes and
accounts payable, trade, within the Game segment.
Investing Activities: During the fiscal year ended March 31, 2005,
Sony made significant capital investments in semiconductors,
particularly the advanced microprocessor "Cell," as well as
investments associated with the amorphous TFT LCD panel manufacturing
joint venture (S-LCD Corporation) established with Samsung
Electronics Co., Ltd.
As a result, cash flow from operating activities exceeded cash flow
from investing activities by Y13.3 billion ($125 million).
Financing Activities: During the fiscal year ended March 31, 2005,
Sony redeemed a portion of its long-term debt. In addition, of the
Y300.0 billion of convertible bonds due on March 31, 2005, Y5.0
billion were redeemed on the maturity date with the remainder being
converted into common stock.
Cash and Cash Equivalents: The total balance of cash and cash
equivalents, accounting for the effect of foreign currency exchange
rate fluctuations, was Y519.7 billion ($4,857 million) as of March
31, 2005, a decrease of Y73.2 billion compared to March 31, 2004.
Cash Flow - Financial Services segment
--------------------------------------
(Billions of yen, millions of U.S. dollars)
Year ended March 31
Cash flow 2004 2005 Change in 2005
Yen
---------------- ------ ------ ------ ------
- From operating Y241.6 Y168.1 Y-73.5 $1,571
activities
- From investing (401.6) (421.4) -19.8 (3,938)
activities
- From financing 141.7 256.4 +114.7 2,396
activities
Cash and cash 274.5 256.3 -18.2 2,395
equivalents at
beginning of the
fiscal year
Cash and cash 256.3 259.4 +3.1 2,424
equivalents at end
of fiscal year
Operating Activities: The cash inflows from insurance premiums and
other exceeded the related cash outflows, reflecting primarily an
increase in insurance-in-force at Sony Life.
Investing Activities: Payments for investments and advances exceeded
proceeds from sales of securities investments, maturities of
marketable securities and collections of advances primarily as a
result of both investments in mainly Japanese fixed income securities
resulting from an increase in insurance-in-force at Sony Life, and a
housing loan campaign carried out at Sony Bank.
Financing Activities: In addition to the increase in policyholders'
accounts at Sony Life, deposits from customers in the banking
business increased primarily due to an increase in the number of
accounts.
Cash and Cash Equivalents: As a result of the above, the balance of
cash and cash equivalents was Y259.4 billion ($2,424 million) as of
March 31, 2005, which was an increase of Y3.1 billion compared to
March 31, 2004.
Consolidated Results for the Fourth Quarter ended March 31, 2005
----------------------------------------------------------------
Sales were Y1,697 billion ($15,860 million), a decrease of 4.2%
compared with the same quarter of the previous fiscal year; on a
local currency basis sales decreased 4%. This reflects the
establishment of Sony BMG (please refer to note).
In the Electronics segment, an increase in intersegment sales to the
Game segment resulted in an increase in sales although sales to
outside customers declined 5.5%. Although sales primarily of flat
panel televisions and LCD rear projection televisions increased,
there was a decrease in sales of mobile phones (primarily to Sony
Ericsson), portable audio products and CRT televisions. In the Game
segment, there was a significant increase in sales as a result of an
increase in both hardware and software sales, primarily associated
with the launch of PlayStation Portable. In the Music segment, sales
decreased due to the establishment of Sony BMG (please refer to note).
In the Pictures segment, sales decreased due to the
absence in the fourth quarter of the current year of transactions
that occurred in the same quarter of the previous year. These
included syndication sales of Seinfeld and the extension of a
licensing agreement for Wheel of Fortune. In the Financial Services
segment, revenue increased mainly due to an increase in revenue from
insurance premiums at Sony Life.
An operating loss of Y77.4 billion ($723 million) was recorded, an
improvement of Y32.3 billion from the same quarter of the previous
year. In the Electronics segment, although there was a deterioration
in the cost of sales ratio associated with a decline in unit selling
prices, there was a reduction in operating loss due to lower
restructuring charges compared to the same quarter of the previous
year. The Game segment recorded operating income, compared to the
operating loss in the same quarter of the previous year, as a result
of an increase in software sales. In the Music segment, a lower
operating loss was recorded primarily due to the establishment of
Sony BMG mentioned above. In the Pictures segment, the absence in the
fourth quarter of the current year of transactions that occurred in
the same quarter of the previous year led to a decrease in operating
income.
Restructuring charges, which are recorded as operating expenses, for
the fourth quarter amounted to Y48.6 billion ($454 million) compared
to Y98.3 billion in the same quarter of the previous fiscal year. In
the Electronics segment, restructuring charges were Y44.9 billion
($420 million) compared to Y89.0 billion in the same quarter of the
previous fiscal year.
The loss before income taxes was Y61.9 billion ($578 million), a
Y31.7 billion improvement compared to the same quarter of the
previous fiscal year. The recording of valuation allowances against
deferred tax assets mainly at European and Japanese subsidiaries of
Sony resulted in smaller tax benefits for the quarter of Y5.3
billion.
Equity in net income of affiliated companies of Y0.5 billion ($4
million) was recorded, a 91.6% decrease from the same quarter of the
previous fiscal year. Sony Ericsson contributed Y2.6 billion ($24
million) to equity in net income, a 52% decrease compared to the same
quarter of the previous year. However, an equity in net loss was
recorded of Y3.1 billion ($29 million) at Sony BMG. Equity in net
loss was also recorded at S-LCD Corporation.
As a result, a net loss of Y56.5 billion ($528 million) was recorded,
a Y18.3 billion deterioration compared to the same quarter of the
previous fiscal year.
Operating Results for the Fourth Quarter ending March 31, 2005 for
Major Affiliates Accounted for by the Equity Method
------------------------------------------------------------------
The following operating results for significant companies accounted
for by the equity method are not consolidated in Sony's consolidated
financial statements. However, Sony believes that this disclosure
provides additional useful analytical information to investors
regarding operating performance. In addition, please note that the
operating results of Sony Ericsson discussed below are reported on an
International Financial Reporting Standards basis, and thereby differ
from the operating results reported on a U.S. GAAP basis contained
within Sony's equity in net income of affiliated companies.
Sony Ericsson recorded sales for the quarter ended March 31, 2005 of
Euro 1,289 million, representing a Euro 50 million or 4% decrease
compared to the same quarter of the previous fiscal year. Income
before taxes was Euro 70 million, a 27%, or Euro 26 million decrease
compared to the same quarter of the previous fiscal year, and net
income of Euro 32 million was recorded, a Euro 49 million, or 60%
decrease year on year. Although there was an increase in units
shipped, slower market growth during the quarter coupled with a
decrease in Sony Ericsson's average selling price led to a decline in
sales. As a result, equity in net income of Y2.6 billion ($24
million) was recorded by Sony.
Sony BMG recorded sales revenue of $962 million, loss before income
taxes of $61.5 million, and a net loss of $61.8 million during the
quarter ended March 31, 2005. Loss before income taxes includes $92
million of restructuring charges. As a result, equity in net loss of
Y3.1 billion ($29 million) was recorded by Sony.
Notes
Note I: During the fiscal year ended March 31, 2005, the average
value of the yen was Y106.5 against the U.S. dollar and Y133.7
against the euro, which was 5.2% higher against the U.S. dollar and
1.9% lower against the euro, compared with the average rates for the
previous fiscal year. Operating results on a local currency basis
described herein reflect sales and operating income obtained by
applying the yen's average exchange rate in the previous fiscal year
to local currency-denominated monthly sales, cost of sales, and
selling, general and administrative expenses in the fiscal year.
Local currency basis results are not reflected in Sony's financial
statements and are not measures conforming with U.S. GAAP. In
addition, Sony does not believe that these measures are a substitute
for U.S. GAAP measures. However, Sony believes that local currency
basis results provide additional useful analytical information to
investors regarding operating performance.
Note II: "Sales and operating revenue" in each business segment
represents sales and operating revenue recorded before intersegment
transactions are eliminated. "Operating income" in each business
segment represents operating income recorded before intersegment
transactions and unallocated corporate expenses are eliminated.
Note III: In the third quarter ended December 31, 2004, Sony adopted
Emerging Issues Task Force ("EITF") Issue No. 04-8, "The Effect of
Contingently Convertible Instruments on Diluted Earnings per Share."
As a result of adopting EITF Issue No. 04-8, diluted earnings per
share of net income for the fiscal year ended March 31, 2004 have
been restated (see Note 9 regarding EITF Issue No. 04-8).
Note IV: During the quarter ended March 31, 2005, the average value
of the yen was Y103.5 against the U.S. dollar and Y135.4 against the
euro, which was 2.7% higher against the U.S. dollar and 2.1% lower
against the euro, compared with the average rates for the same
quarter of the previous fiscal year.
Rewarding Shareholders
Sony believes that continuously increasing corporate value and
providing dividends are essential to rewarding shareholders. It is
Sony's policy to utilize retained earnings, after ensuring the
perpetuation of stable dividends, to carry out various investments
that contribute to an increase in corporate value such as those that
ensure future growth and strengthen competitiveness.
A year-end cash dividend of Y12.5 ($0.12) per share of Sony
Corporation common stock will be presented for approval at the Board
of Directors meeting to be held on May 16, 2005 and, if approved,
will be payable on June 1, 2005. Sony Corporation has already paid an
interim dividend of Y12.5 per share to each shareholder; accordingly,
the total annual cash dividend per share would be Y25.0.
Regarding shares of subsidiary tracking stock issued in Japan by Sony
Corporation, Sony Communication Network Corporation ("SCN") has been
working to manage its operations so as to expand cash flow, fully
solidify its financial base, and increase its retained earnings to
aggressively expand its business to strengthen its foundation and
respond to the quickly expanding Internet market. For these reasons,
SCN does not plan to distribute earnings to SCN shareholders for the
time being. As such, Sony Corporation will continue its policy of not
paying dividends to shareholders of the subsidiary tracking stock.
Number of Employees
The number of employees at the end of March 2005 was approximately
151,400, a decrease of approximately 10,600 employees from the end of
March 2004. Although employees increased at manufacturing facilities
in Asia, particularly in China, the total number of employees
declined due to the reductions associated with the implementation of
restructuring activities in Japan, the U.S., Europe and South-East
Asia, and a decrease in the number of employees due to the
establishment of Sony BMG.
Outlook for the Fiscal Year ending March 31, 2006
-------------------------------------------------
Change from
previous year
-------------
Sales and operating revenue Y7,450 billion +4%
Operating income 160 billion +40
Income before income taxes 170 billion +8
Equity in net income of 5 billion -83
affiliated companies
Net income 80 billion -51
Capital expenditures Y410 billion +15%
(additions to fixed assets)
Depreciation and amortization* 390 billion +5
(Depreciation expenses for (320 billion) (+6)
tangible assets)
* Including amortization of intangible assets and amortization
of deferred insurance acquisition costs.
Research and development expenses 520 billion +4%
Assumed exchange rates: approximately Y103 to the U.S. dollar,
approximately Y133 to the euro.
The forecast for the consolidated operating results stated above, has
been prepared based on the current business environment and reflects
the factors noted below.
During the fiscal year, primarily in the Electronics segment,
restructuring charges of approximately Y72 billion are expected to be
incurred across the Sony Group (Y90 billion of restructuring expenses
were recorded in the fiscal year ended March 31, 2005). The above
forecast for operating income reflects these restructuring charges as
operating expenses.
As part of this forecast, the forecast for operating income and
income before income taxes reflects an estimated gain of
approximately Y60 billion related to the transfer to the Japanese
Government of the substitutional portion, the benefit obligation
related to past employee service, of Sony's Employee Pension Fund.
Furthermore, Y35 billion of this estimated gain is reflected in the
forecast for net income after deductions for the effect of income
taxes.
The forecast for each business segment (excluding the anticipated
gain from the transfer of the substitutional portion of Sony's
Employee Pension Fund) is as follows:
Electronics
Sales are expected to increase primarily due to an increase in the
sales of products such as flat panel televisions and LCD projection
televisions. With regard to operating performance, although an
improvement is expected due to the increase in sales and a reduction
in fixed costs relating to restructuring implemented during the
previous fiscal year, a decline in unit prices, appreciation of the
yen and increase in both depreciation and amortization and research
and development expenses is also anticipated. An improvement in
operating performance is expected, as in addition to the
abovementioned factors, a reduction in restructuring charges is also
anticipated.
Game
Sales are expected to increase due to the contribution from both
PlayStation Portable hardware and software. Although PS2 and
PlayStation Portable are expected to contribute to operating income,
increased research and development costs primarily for the next
generation computer entertainment system are expected to leave
operating income relatively unchanged.
Music
Due to the establishment of Sony BMG (please refer to note) sales
are expected to decrease. A small increase in operating income
is anticipated.
Pictures
Although sales are expected to increase due to the impact of the
acquisition of MGM, operating income is expected to decrease compared
to the previous fiscal year, in which Spider-Man 2 was a substantial
contributor.
Financial Services
Although revenue is expected to continue to grow mainly due to an
increase in revenue from insurance premiums at Sony Life, a small
decrease is expected in operating income due to an anticipated
increase in insurance claim payments.
Semiconductor capital expenditures
Capital expenditures within the semiconductor business during the
fiscal year are expected to amount to approximately Y160 billion (the
actual amount in the fiscal year ended March 31, 2005 was
approximately Y150 billion).
As of March 31, 2005, Sony had deferred tax assets on tax loss carry
forwards in relation to Japanese local income taxes totaling Y77.5
billion. However, there is a possibility that, depending on future
operating performance, Sony may establish a valuation allowance
against part or all of its deferred tax assets that would be charged
to income as an increase in tax expense. It should be noted, though,
that the forecast above does not include this possibility.
For your reference, further details about valuation allowances
against deferred tax assets can be found under the "Deferred tax
asset valuation" section of "Critical Accounting Policies" in Item 5.
Operating and Financial Review and Prospects of Sony Corporation's
Form 20-F for the fiscal year ended March 31, 2004.
URL:http://www.sec.gov/Archives/edgar/data/313838/000114554904000801/
0001145549-04-000801-index.htm
Cautionary Statement
--------------------
Statements made in this release with respect to Sony's current plans,
estimates, strategies and beliefs and other statements that are not
historical facts are forward-looking statements about the future
performance of Sony. Forward-looking statements include, but are not
limited to, those statements using words such as "believe," "expect,"
"plans," "strategy," "prospects," "forecast," "estimate," "project,"
"anticipate," "may" or "might" and words of similar meaning in
connection with a discussion of future operations, financial
performance, events or conditions. From time to time, oral or written
forward-looking statements may also be included in other materials
released to the public. These statements are based on management's
assumptions and beliefs in light of the information currently
available to it. Sony cautions you that a number of important risks
and uncertainties could cause actual results to differ materially
from those discussed in the forward-looking statements, and therefore
you should not place undue reliance on them. You also should not rely
on any obligation of Sony to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. Sony disclaims any such obligation. Risks and
uncertainties that might affect Sony include, but are not limited to
(i) the global economic environment in which Sony operates, as well
as the economic conditions in Sony's markets, particularly levels of
consumer spending; (ii) exchange rates, particularly between the yen
and the U.S. dollar, the euro and other currencies in which Sony
makes significant sales or in which Sony's assets and liabilities are
denominated; (iii) Sony's ability to continue to design and develop
and win acceptance of its products and services, which are offered in
highly competitive markets characterized by continual new product
introductions, rapid development in technology and subjective and
changing consumer preferences (particularly in the Electronics, Game,
Music and Pictures segments); (iv) Sony's ability to implement
successfully personnel reduction and other business reorganization
activities in its Electronics, Music and Pictures segments; (v)
Sony's ability to implement successfully its network strategy for its
Electronics, Music, Pictures and Other segments and to develop and
implement successful sales and distribution strategies in its Music
and Pictures segments in light of the Internet and other
technological developments; (vi) Sony's continued ability to devote
sufficient resources to research and development and, with respect to
capital expenditures, to correctly prioritize investments
(particularly in the Electronics segment); and (vii) the success of
Sony's joint ventures and alliances. Risks and uncertainties also
include the impact of any future events with material unforeseen
impacts.
Business Segment Information
----------------------------
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Sales and operating 2004 2005 Change 2005
revenue
------------------ ------ ------ ------ ------
Electronics
Customers Y4,838,268 Y4,786,236 -1.1% $ 44,731
Intersegment 204,051 235,411 2,200
------------------ ------ ------ ------
Total 5,042,319 5,021,647 -0.4 46,931
Game
Customers 753,732 702,524 -6.8 6,566
Intersegment 26,488 27,230 255
------------------ ------ ------ ------
Total 780,220 729,754 -6.5 6,821
Music
Customers 409,487 216,779 -47.1 2,026
Intersegment 30,819 32,326 302
------------------ ------ ------ ------
Total 440,306 249,105 -43.4 2,328
Pictures
Customers 756,370 733,677 -3.0 6,857
Intersegment 0 0 0
------------------ ------ ------ ------
Total 756,370 733,677 -3.0 6,857
Financial Services
Customers 565,752 537,715 -5.0 5,025
Intersegment 27,792 22,842 213
------------------ ------ ------ ------
Total 593,544 560,557 -5.6 5,238
Other
Customers 172,782 182,685 +5.7 1,707
Intersegment 95,535 71,742 671
------------------ ------ ------ ------
Total 268,317 254,427 -5.2 2,378
Elimination (384,685) (389,551) - (3,641)
------------------ ------ ------ ------
Consolidated total Y7,496,391 Y7,159,616 -4.5 $ 66,912
Electronics intersegment amounts primarily consist of transactions
with the Game business.
Music intersegment amounts primarily consist of transactions with the
Game and Pictures businesses.
Other intersegment amounts primarily consist of transactions with the
Electronics business.
Operating income (loss) 2004 2005 Change 2005
------------------ ------ ------ ------ ------
Electronics Y(6,824) Y(34,305) - $(321)
Game 67,578 43,170 -36.1% 404
Music (5,997) 8,783 - 82
Pictures 35,230 63,899 +81.4 597
Financial Services 55,161 55,490 +0.6 519
Other (12,054) (4,077) - (38)
------------------ ------ ------ ------
Total 133,094 132,960 -0.1 1,243
Unallocated corporate expenses (34,192) (19,041) - (178)
and elimination
------------------ ------ ------ ------
Consolidated total Y98,902 Y113,919 +15.2% $1,065
Commencing April 1, 2004, Sony has partly realigned its business
segment configuration. Results of the previous year have been
reclassified to conform to the presentations for the current year
(See Notes 5 and 6).
(Millions of yen, millions of U.S. dollars)
Three months ended March 31
(Unaudited)
Sales and operating 2004 2005 Change 2005
revenue
------------------ ------ ------ ------ ------
Electronics
Customers Y1,123,418 Y1,061,464 -5.5% $ 9,920
Intersegment 23,991 110,892 1,036
------------------ ------ ------ ------
Total 1,147,409 1,172,356 +2.2 10,956
Game
Customers 121,436 213,990 +76.2 2,000
Intersegment 5,301 8,133 76
------------------ ------ ------ ------
Total 126,737 222,123 +75.3 2,076
Music
Customers 100,708 31,148 -69.1 291
Intersegment 4,337 8,069 75
------------------ ------ ------ ------
Total 105,045 39,217 -62.7 366
Pictures
Customers 236,602 190,647 -19.4 1,782
Intersegment 0 0 0
------------------ ------ ------ ------
Total 236,602 190,647 -19.4 1,782
Financial Services
Customers 144,679 150,887 +4.3 1,410
Intersegment 7,462 5,222 49
------------------ ------ ------ ------
Total 152,141 156,109 +2.6 1,459
Other
Customers 45,348 48,885 +7.8 457
Intersegment 24,643 20,314 190
------------------ ------ ------ ------
Total 69,991 69,199 -1.1 647
Elimination (65,734) (152,630) - (1,426)
------------------ ------ ------ ------
Consolidated total Y1,772,191 Y1,697,021 -4.2% $ 15,860
Electronics intersegment amounts primarily consist of transactions
with the Game business.
Music intersegment amounts primarily consist of transactions with the
Game and Pictures businesses.
Other intersegment amounts primarily consist of transactions with the
Electronics business.
Operating income (loss) 2004 2005 Change 2005
------------------ ------ ------ ------ ------
Electronics Y(129,257) Y(99,428) - $ (929)
Game (6,886) 1,488 - 14
Music (9,126) (2,629) - (25)
Pictures 36,634 13,734 -62.5% 128
Financial Services 17,192 16,302 -5.2 153
Other (6,506) (4,174) - (39)
------------------ ------ ------ ------
Total (97,949) (74,707) - (698)
Unallocated corporate expenses (11,807) (2,706) - (25)
and elimination
------------------ ------ ------ ------
Consolidated total Y(109,756) Y(77,413) - $ (723)
Commencing April 1, 2004, Sony has partly realigned its business
segment configuration. Results of the previous year have been
reclassified to conform to the presentations for the current quarter
(See Notes 5 and 6).
Electronics Sales and Operating Revenue to Customers by Product
Category
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Sales and operating revenue 2004 2005 Change 2005
--------------------------- ------ ------ ------ ------
Audio Y 675,496 Y 571,864 -15.3% $ 5,345
Video 949,261 1,034,736 +9.0 9,670
Televisions 925,501 957,122 +3.4 8,945
Information and Communications 834,757 778,374 -6.8 7,275
Semiconductors 253,237 246,314 -2.7 2,302
Components 623,799 619,477 -0.7 5,789
Other 576,217 578,349 +0.4 5,405
--------------------------- ------ ------ ------
Total Y4,838,268 Y4,786,236 -1.1% $ 44,731
Three months ended March 31 (Unaudited)
Sales and operating revenue 2004 2005 Change 2005
--------------------------- ------ ------ ------ ------
Audio Y 132,115 Y 106,476 -19.4% $ 995
Video 197,515 207,912 +5.3 1,943
Televisions 215,257 222,639 +3.4 2,081
Information and Communications 208,816 204,563 -2.0 1,912
Semiconductors 66,163 50,657 -23.4 473
Components 159,464 142,640 -10.6 1,333
Other 144,088 126,577 -12.2 1,183
--------------------------- ------ ------ ------
Total Y1,123,418 1,061,464 -5.5% $ 9,920
The above table is a breakdown of Electronics sales and operating
revenue to customers in the Business Segment Information. The
Electronics segment is managed as a single operating
segment by Sony's management. However, Sony believes that the
information in this table is useful to investors in understanding the
product categories in this business segment. In addition, commencing
April 1, 2004, Sony has partly realigned its product category
configuration in the Electronics segment. Accordingly, results of the
previous year have been restated. (See Note 7)
Geographic Segment Information
------------------------------
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Sales and operating revenue 2004 2005 Change 2005
--------------------------- ------ ------ ------ ------
Japan Y2,220,747 Y2,100,793 -5.4% $ 19,634
United States 2,121,110 1,977,310 -6.8 18,479
Europe 1,765,053 1,612,536 -8.6 15,070
Other Areas 1,389,481 1,468,977 +5.7 13,729
--------------------------- ------ ------ ------
Total Y7,496,391 Y7,159,616 -4.5% $ 66,912
Three months ended March 31
(Unaudited)
Sales and operating revenue 2004 2005 Change 2005
--------------------------- ------ ------ ------ ------
Japan Y 549,960 Y 527,811 -4.0% $ 4,933
United States 492,729 455,513 -7.6 4,257
Europe 406,956 367,949 -9.6 3,439
Other Areas 322,546 345,748 +7.2 3,231
--------------------------- ------ ------ ------
Total Y1,772,191 Y1,697,021 -4.2% $ 15,860
Classification of Geographic Segment Information shows sales and
operating revenue recognized by location of customers.
Consolidated Statements of Income
---------------------------------
(Millions of yen, millions of U.S. dollars, except per share amounts)
Year ended March 31
2004 2005 Change 2005
------ ------ ------ ------
Sales and operating revenue: %
Net sales Y6,883,478 Y6,565,010 $ 61,355
Financial service revenue 565,752 537,715 5,025
Other operating revenue 47,161 56,891 532
------ ------ ------
7,496,391 7,159,616 -4.5 66,912
Costs and expenses:
Cost of sales 5,058,205 5,000,112 46,730
Selling, general and 1,798,239 1,535,015 14,346
administrative
Financial service expenses 505,550 482,576 4,510
Loss on sale, disposal or 35,495 27,994 261
impairment of assets, net
------ ------ ------
7,397,489 7,045,697 65,847
Operating income 98,902 113,919 +15.2 1,065
Other income:
Interest and dividends 18,756 14,708 137
Royalty income 34,244 31,709 296
Foreign exchange gain, net 18,059 - -
Gain on sale of securities 11,774 5,437 51
investments, net
Gain on change in interest 4,870 16,322 153
in subsidiaries and equity
investees
Other 34,587 29,447 275
------ ------ ------
122,290 97,623 912
Other expenses:
Interest 27,849 24,578 230
Loss on devaluation of 16,481 3,715 35
securities investments
Foreign exchange loss, net - 524 5
Other 32,795 25,518 238
------ ------ ------
77,125 54,335 508
------ ------ ------
Income before income taxes 144,067 157,207 +9.1 1,469
Income taxes 52,774 16,044 150
------ ------ ------
Income before minority interest, 91,293 141,163 +54.6 1,319
equity in net income of
affiliated companies and
cumulative effect of an
accounting change
Minority interest in income 2,379 1,651 15
of consolidated subsidiaries
Equity in net income of 1,714 29,039 271
affiliated companies
------ ------ ------
Income before cumulative 90,628 168,551 +86.0 1,575
effect of an accounting
change
Cumulative effect of an (2,117) (4,713) (44)
accounting change
(2004: Net of income taxes of
Y0 million)
(2005: Net of income taxes of
Y2,675 million)
------ ------ ------
Net income Y 88,511 Y 163,838 +85.1 $ 1,531
------ ------ ------
Per share data:
Common stock
Income before cumulative
effect of an accounting
change
- Basic Y 98.26 Y 180.96 +84.2 $ 1.69
- Diluted 89.03 162.59 +82.6 1.52
Net income
- Basic 95.97 175.90 +83.3 1.64
- Diluted 87.00 158.07 +81.7 1.48
Subsidiary tracking stock
Net income (loss)
- Basic (41.80) 17.21 - 0.16
Additional Paid-in Capital and Retained Earnings
------------------------------------------------
The following information shows change in additional paid-in capital
and change in retained earnings for the years ended March 31, 2004
and 2005.
Sony discloses this supplemental information in accordance with
disclosure requirements of the Japanese Securities and Exchange Law,
to which Sony, as a Japanese public company, is subject.
(Millions of yen, millions of U.S. dollars)
Year ended March 31
2004 2005 2005
------ ------ ------
Additional Paid-in Capital:
Balance, beginning of year Y 984,196 Y 992,817 $ 9,279
Conversion of convertible bonds 3,988 141,407 1,321
Exchange offerings 5,409 - -
Stock based compensation - 340 3
Reissuance of treasury stock (776) (342) (3)
------ ------ ------
Balance, end of year Y 992,817 Y 1,134,222 $ 10,600
(Millions of yen, millions of U.S. dollars)
Year ended March 31
2004 2005 2005
------ ------ ------
Retained Earnings:
Balance, beginning of year Y 1,301,740 Y 1,367,060 $ 12,776
Net income 88,511 163,838 1,531
Cash dividends (23,138) (24,030) (224)
Reissuance of treasury stock - (245) (2)
Common stock issue costs, (53) (541) (5)
net of tax
------ ------ ------
Balance, end of year Y 1,367,060 Y 1,506,082 $ 14,076
Consolidated Statements of Income (Unaudited)
---------------------------------------------
(Millions of yen, millions of U.S. dollars, except per share amounts)
Three months ended March 31
2004 2005 Change 2005
------ ------ ------ ------
Sales and operating revenue: %
Net sales Y1,615,836 Y1,529,187 $ 14,292
Financial service revenue 144,679 150,887 1,410
Other operating revenue 11,676 16,947 158
------ ------ ------
1,772,191 1,697,021 -4.2 15,860
Costs and expenses:
Cost of sales 1,238,300 1,223,358 11,433
Selling, general and 495,378 403,126 3,768
administrative
Financial service expenses 126,385 134,457 1,256
Loss on sale, disposal or 21,884 13,493 126
impairment of assets, net
------ ------ ------
1,881,947 1,774,434 16,583
Operating income (loss) (109,756) (77,413) - (723)
Other income:
Interest and dividends 5,388 4,191 39
Royalty income 10,389 9,692 91
Foreign exchange gain, net 7,588 29 0
Gain on sale of securities 28 - -
investments, net
Gain on change in interest 3,951 1,215 12
in subsidiaries and equity
investees
Other 8,139 10,840 101
------ ------ ------
35,483 25,967 243
Other expenses:
Interest 7,179 2,755 26
Loss on devaluation of 3,931 1,296 12
securities investments
Loss on sales of securities - 14 0
investments, net
Other 8,190 6,382 60
------ ------ ------
19,300 10,447 98
------ ------ ------
Income (loss) before income (93,573) (61,893) - (578)
taxes
Income taxes (50,498) (5,334) (49)
------ ------ ------
Income (loss) before minority (43,075) (56,559) - (529)
interest and equity in net
income of affiliated
companies
Minority interest in income 557 351 3
of consolidated subsidiaries
Equity in net income of 5,477 460 4
affiliated companies
------ ------ ------
Net income (loss) Y (38,155)Y (56,450) - $ (528)
------ ------ ------
Per share data:
Common stock
Net income (loss)
- Basic Y (41.23)Y (59.40) - $ (0.56)
- Diluted (41.23) (59.40) - (0.56)
Subsidiary tracking stock
Net income (loss) -
- Basic (13.12) (28.20) - (0.26)
Consolidated Balance Sheets
---------------------------
(Millions of yen, millions of U.S. dollars)
March 31
ASSETS 2004 2005 2005
------ ------ ------
Current assets:
Cash and cash equivalents Y 849,211 Y 779,103 $ 7,281
Time deposits 4,662 1,492 14
Marketable securities 274,748 460,202 4,301
Notes and accounts receivable, 1,123,863 1,113,071 10,403
trade
Allowance for doubtful accounts (112,674) (87,709) (820)
and sales returns
Inventories 666,507 631,349 5,900
Deferred income taxes 125,532 141,154 1,319
Prepaid expenses and other 431,506 517,509 4,837
current assets
------ ------ ------
3,363,355 3,556,171 33,235
Film costs 256,740 278,961 2,607
Investments and advances:
Affiliated companies 86,253 252,905 2,364
Securities investments and 2,426,697 2,492,784 23,297
other
------ ------ ------
2,512,950 2,745,689 25,661
Property, plant and equipment:
Land 189,785 182,900 1,709
Buildings 930,983 925,796 8,652
Machinery and equipment 2,053,085 2,192,038 20,486
Construction in progress 98,480 92,611 866
Less-Accumulated depreciation (1,907,289) (2,020,946) (18,887)
------ ------ ------
1,365,044 1,372,399 12,826
Other assets:
Intangibles, net 248,010 187,024 1,748
Goodwill 277,870 283,923 2,653
Deferred insurance acquisition 349,194 374,805 3,503
costs
Deferred income taxes 203,203 240,396 2,247
Other 514,296 459,732 4,297
------ ------ ------
1,592,573 1,545,880 14,448
------ ------ ------
Y 9,090,662 Y 9,499,100 $ 88,777
------ ------ ------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Short-term borrowings Y 91,260 Y 63,396 $ 592
Current portion of long-term 383,757 166,870 1,560
debt
Notes and accounts payable, 778,773 806,044 7,533
trade
Accounts payable, other and 812,175 746,466 6,976
accrued expenses
Accrued income and other taxes 57,913 55,651 520
Deposits from customers in the 378,851 546,718 5,110
banking business
Other 479,486 424,223 3,965
------ ------ ------
2,982,215 2,809,368 26,256
Long-term liabilities:
Long-term debt 777,649 678,992 6,346
Accrued pension and severance 368,382 352,402 3,293
costs
Deferred income taxes 96,193 72,227 675
Future insurance policy benefits 2,178,626 2,464,295 23,031
and other
Other 286,737 227,631 2,127
------ ------ ------
3,707,587 3,795,547 35,472
Minority interest in consolidated 22,858 23,847 223
subsidiaries
Stockholders' equity:
Capital stock 480,267 621,709 5,810
Additional paid-in capital 992,817 1,134,222 10,600
Retained earnings 1,367,060 1,506,082 14,076
Accumulated other comprehensive (449,959) (385,675) (3,604)
income
Treasury stock, at cost (12,183) (6,000) (56)
------ ------ ------
2,378,002 2,870,338 26,826
------ ------ ------
Y 9,090,662 Y 9,499,100 $ 88,777
------ ------ ------
Consolidated Statements of Cash Flows
-------------------------------------
(Millions of yen, millions of U.S. dollars)
Year ended March 31
2004 2005 2005
------ ------ ------
Cash flows from operating
activities:
Net income Y 88,511 Y 163,838 $ 1,531
Adjustments to reconcile net
income to net cash provided
by operating activities
Depreciation and amortization, 366,269 372,865 3,485
including amortization of
deferred insurance acquisition
costs
Amortization of film costs 305,786 276,320 2,582
Accrual for pension and severance 35,562 22,837 214
costs, less payments
Loss on sale, disposal or 35,495 27,994 261
impairment of assets, net
Gain on sale of securities (11,774) (5,437) (51)
investments, net
Gain on change in interest in (4,870) (16,322) (153)
subsidiaries and equity
investees
Deferred income taxes (34,445) (69,466) (649)
Equity in net (income) loss of 1,732 (15,648) (146)
affiliated companies, net of
dividends
Cumulative effect of an accounting 2,117 4,713 44
change
Changes in assets and liabilities:
Increase in notes and accounts (63,010) (22,056) (206)
receivable, trade
(Increase) decrease in inventories (78,656) 34,128 319
Increase in film costs (299,843) (294,272) (2,750)
Increase in notes and accounts 93,950 31,473 294
payable, trade
Increase (decrease) in accrued (46,067) 3 0
income and other taxes
Increase in future insurance 264,216 144,143 1,347
policy benefits and other
Increase in deferred insurance (71,219) (65,051) (608)
acquisition costs
(Increase) decrease in marketable 369 (28,524) (266)
securities held in the financial
service business for trading
purpose
Increase in other current assets (34,991) (29,699) (278)
Increase in other current 44,772 46,545 435
liabilities
Other 38,731 68,613 642
------ ------ ------
Net cash provided by operating 632,635 646,997 6,047
activities
------ ------ ------
Cash flows from investing
activities:
Payments for purchases of fixed (427,344) (453,445) (4,238)
assets
Proceeds from sales of fixed 33,987 34,184 319
assets
Payments for investments and (1,167,945) (1,309,092) (12,235)
advances by financial service
business
Payments for investments and (33,329) (158,151) (1,478)
advances (other than financial
service business)
Proceeds from maturities of 791,188 923,593 8,632
marketable securities, sales of
securities investments and
collections of advances by
financial service business
Proceeds from maturities of 35,521 25,849 242
marketable securities, sales
of securities investments and
collections of advances (other
than financial service business)
Other 6,130 5,890 55
------ ------ ------
Net cash used in investing (761,792) (931,172) (8,703)
activities
------ ------ ------
Cash flows from financing
activities:
Proceeds from issuance of 267,864 57,232 535
long-term debt
Payments of long-term debt (32,042) (94,862) (887)
Increase (decrease) in short-term (57,708) 11,397 107
borrowings
Increase in deposits from 129,874 294,352 2,751
customers in the financial
service business
Dividends paid (23,106) (22,978) (215)
Other 28,401 (39,964) (373)
------ ------ ------
Net cash provided by financing 313,283 205,177 1,918
activities
------ ------ ------
Effect of exchange rate changes (47,973) 8,890 83
on cash and cash equivalents
Net increase (decrease) in cash 136,153 (70,108) (655)
and cash equivalents
Cash and cash equivalents at 713,058 849,211 7,936
beginning of the fiscal year
------ ------ ------
Cash and cash equivalents at end Y 849,211 Y 779,103 $ 7,281
of the fiscal year
------ ------ ------
(Notes)
1. U.S. dollar amounts have been translated from yen, for
convenience only, at the rate of Y107 = U.S. $1, the
approximate Tokyo foreign exchange market rate as of
March 31, 2005.
2. As of March 31, 2005, Sony had 913 consolidated
subsidiaries (including variable interest entities). It has
applied the equity accounting method in respect to 56
affiliated companies.
3. Sony calculates and presents per share data separately for
Sony's common stock and for the subsidiary tracking stock
which is linked to the economic value of Sony Communication
Network Corporation, based on Statement of Financial Accounting
Standards ("FAS") No.128, "Earnings per Share". The holders of
the tracking stock have the right to participate in earnings,
together with common stock holders. Accordingly, Sony calculates
per share data by the "two-class" method based on FAS No.128.
Under this method, basic net income per share for each class of
stock is calculated based on the earnings allocated to each class
of stock for the applicable period, divided by the
weighted-average number of outstanding shares in each class
during the applicable period. The earnings allocated to the
subsidiary tracking stock are determined based on the
subsidiary tracking stockholders' economic interest in the
targeted subsidiary's earnings available for dividends or change
in accumulated losses that do not include those of the targeted
subsidiary's subsidiaries. The earnings allocated to common stock
are calculated by subtracting the earnings allocated to the
subsidiary tracking stock from Sony's net income for the
period.
Weighted-average shares used for computation of earnings per
share of common stock are as follows. The dilutive effect in
the weighted-average shares for the three months and the year
ended March 31, 2004 and 2005 mainly resulted from convertible
bonds.
Weighted-average shares (Thousands of shares)
----------------------- Year ended March 31
2004 2005
------ ------
Income before cumulative
effect of an accounting
change and net income
- Basic 923,650 931,125
- Diluted 1,044,818 1,043,775
Weighted-average shares (Thousands of shares)
----------------------- Three months ended March 31
2004 2005
------ ------
Net income
- Basic 924,439 948,950
- Diluted 924,439 948,950
By adopting the Emerging Issues Task Force ("EITF")
Issue No. 04-8, "The Effect of Contingently Convertible
Instruments on Diluted Earnings per Share", issued in July 2004,
diluted earnings per share of income before cumulative effect
of an accounting change and net income for the year ended
March 31, 2004 were restated respectively (see Note 9. Adoption
of New Accounting Standards).
Weighted-average shares used for computation of earnings per
share of the subsidiary tracking stock for the three months and
the year ended March 31, 2004 and 2005 are 3,072 thousand shares.
There were no potentially dilutive securities or options granted
for earnings per share of the subsidiary tracking stock.
4. Sony's comprehensive income is comprised of net income and
other comprehensive income. Other comprehensive income includes
changes in unrealized gains or losses on securities, unrealized
gains or losses on derivative instruments, minimum pension
liability adjustment and foreign currency translation adjustments.
Net income (loss), other comprehensive income and comprehensive
income (loss) for the three months and the year ended
March 31, 2004 and 2005 were as follows:
(Millions of yen, millions of U.S. dollars)
Year ended March 31 Three months ended March 31
-------------------------- -------------------------
2004 2005 2005 2004 2005 2005
----------------------------------------------------------------------
Net income Y 88,511 Y 163,838 $1,531 Y(38,155) Y (56,450) $(528)
(loss)
Other
comprehensive
income:
Unrealized 52,292 (7,281) (68) 21,385 7,012 66
gains (losses)
on securities
Unrealized 4,193 (1,890) (18) 1,302 (2,009) (19)
gains (losses)
on derivative
instruments
Minimum pension 93,415 (769) (7) 95,611 (29,304) (274)
liability
adjustment
Foreign (127,881) 74,224 694 (27,752) 43,858 410
currency
translation
adjustments
------------------------------------------------------
22,019 64,284 601 90,546 19,557 183
----------------------------------------------------------------------
Comprehensive Y 110,530 Y228,122 $2,132 Y52,391 Y (36,893) $(345)
income (loss)
----------------------------------------------------------------------
5. As of August 1, 2004, Sony and Bertelsmann AG combined their
recorded music businesses in a joint venture. In connection
with the establishment of this joint venture, the non-Japan
based disc manufacturing and physical distribution businesses,
formerly included within the Music segment, have been
reclassified to the "Other" category in the Electronics
segment. Results for the same period of the previous year in
the Electronics and Music segments have been restated to
conform to the presentation for this year.
6. In July 2004, in order to establish a more efficient and
coordinated semiconductor supply structure, the Sony group has
integrated its semiconductor manufacturing business by
transferring Sony Computer Entertainment's semiconductor
manufacturing operation from the Game segment to the
Electronics segment. As a result of this transfer, sales
revenue and expenditures associated with this operation are
now recorded within the "Semiconductor" category in the
Electronics segment. The results for the same period of the
previous fiscal year have not been restated as such comparable
figures cannot be practically obtained given that it was not
operated as a separate line of business within the Game
segment. This integration of the semiconductor manufacturing
businesses is a part of Sony' semiconductor strategy of
utilizing semiconductor technologies and manufacturing
equipment originally developed or designed for the Game
business within the Sony group as a whole.
7. Commencing April 1, 2004, Sony has partly realigned its
product category configuration in the Electronics segment.
Accordingly, results of the previous year have been
reclassified. The primary changes are as follows;
Main Product Previous Product New Product Category
Category
------------ ---------------- --------------------
AIWA "Other" -> "Audio" or "Video" or
"Televisions"
Set-top box "Video" -> "Televisions"
8. In January 2003, the Financial Accounting Standards
Board ("FASB") issued FASB Interpretation ("FIN") No.46,
"Consolidation of Variable Interest Entities - an
Interpretation of Accounting Research Bulletins ("ARB")
No.51", and the revised FIN No.46 was issued in December
2003. This interpretation addresses consolidation by a
primary beneficiary of a variable interest entity ("VIE").
Sony adopted FIN No.46 on July 1, 2003. As a result of the
adoption of FIN No.46, Sony recognized Y2,117 million of
loss as the cumulative effect of an accounting change.
Additionally, Sony's assets and liabilities increased as
non-cash transactions, which resulted in no cash flows, by
Y95,255 million and Y97,950 million, respectively, as
well as cash and cash equivalents of Y1,521 million.
9. Adoption of New Accounting Standards
Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for
Separate Accounts -
------------------------------------------------------
In July 2003, the Accounting Standards Executive Committee
of the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 03-1, "Accounting and
Reporting by Insurance Enterprises for Certain Nontraditional
Long-Duration Contracts and for Separate Accounts". SOP 03-1
requires insurance enterprises to record additional reserves
for long-duration life insurance contracts with minimum
guarantee or annuity receivable options. Additionally, SOP
03-1 provides guidance for the presentation of separate
accounts. This statement is effective for fiscal years
beginning after December 15, 2003. Sony adopted SOP 03-1 on
April 1, 2004. As a result of the adoption of SOP 03-1, Sony's
operating income decreased by Y1,595 million ($15 million)
and Y5,156 million ($48 million) for the three months and the
year ended March 31, 2005, respectively. Additionally, on
April 1, 2004, Sony recognized Y4,713 million ($44 million)
of loss (net of income taxes of Y2,675 million) as a
cumulative effect of an accounting change. In addition, the
separate account assets, which are defined by insurance
business law in Japan and were previously included in "Security
investments and other" on the consolidated balance sheet, were
excluded from the category of separate accounts under the
provision of SOP 03-1. Accordingly, the separate account assets
are now treated as general accounts and included in "Marketable
securities" on the consolidated balance sheet.
The Effect of Contingently Convertible Instruments on Diluted
Earnings per Share -
-------------------------------------------------------------
In July 2004, the EITF issued EITF Issue No. 04-8, "The Effect
of Contingently Convertible Instruments on Diluted Earnings
per Share". In accordance with FAS No.128, Sony had not
included in the computation of diluted earnings per share
("EPS") the number of potential common stock upon the
conversion of contingently convertible debt instruments
("Co-Cos") that have not met the conditions to exercise the
stock acquisition rights. EITF Issue No. 04-8 requires that
the maximum number of common stock that could be issued upon
the conversion of Co-Cos be included in diluted EPS
computations from the date of issuance regardless of whether
the conditions to exercise the rights have been met. EITF
Issue No. 04-8 is effective for reporting periods ending
after December 15, 2004. Sony adopted EITF Issue No. 04-8
during the quarter ended December 31, 2004. As a result of
the adoption of EITF Issue No. 04-8, Sony's diluted EPS of
income before cumulative effect of an accounting change and
net income for the year ended March 31, 2004 were restated
respectively. Sony's diluted EPS of income before cumulative
effect of an accounting change and net income for the year
ended March 31, 2005 were decreased by Y7.26 ($0.07) and
Y7.06 ($0.07), respectively, compared to those before
adopting EITF Issue No. 04-8.
Other Consolidated Financial Data
(Millions of yen, millions of U.S. dollars)
Year ended March 31
2004 2005 Change 2005
------ ------ ------ ------
Capital expenditures (additions Y 378,264 Y 356,818 -5.7% $ 3,335
to property, plant and
equipment)
Depreciation and amortization 366,269 372,865 +1.8 3,485
expenses*
(Depreciation expenses for (286,911) (300,752) (+4.8) (2,811)
tangible assets)
Research and development 514,483 502,008 -2.4 4,692
expenses
Three months ended March 31
2004 2005 Change 2005
------ ------ ------ ------
Capital expenditures (additions Y109,582 Y 99,996 -8.7% $ 935
to property, plant and equipment)
Depreciation and amortization 99,339 104,125 +4.8 973
expenses*
(Depreciation expenses for (76,485) (83,672) (+9.4) (782)
tangible assets)
Research and development expenses 140,368 131,978 -6.0 1,233
* Including amortization expenses for intangible assets and for
deferred insurance acquisition costs
Condensed Financial Services Financial Statements (Unaudited)
-------------------------------------------------------------
The results of the Financial Services segment are included in Sony's
consolidated financial statements. The following schedules show
unaudited condensed financial statements for the Financial Services
segment and all other segments excluding Financial Services. These
presentations are not required under U.S. GAAP, which is used in
Sony's consolidated financial statements. However, because the
Financial Services segment is different in nature from Sony's other
segments, Sony believes that a comparative presentation may be useful
in understanding and analyzing Sony's consolidated financial
statements.
Transactions between the Financial Services segment and Sony
without Financial Services are eliminated in the consolidated figures
shown below.
Condensed Statements of Income
------------------------------
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Financial Services 2004 2005 Change 2005
%
------ ------ ------ ------
Financial service revenue Y 593,544 Y 560,557 -5.6 $ 5,238
Financial service expenses 538,383 505,067 -6.2 4,719
------ ------ ------ ------
Operating income 55,161 55,490 +0.6 519
Other income (expenses), net 1,958 10,204 +421.1 95
------ ------ ------ ------
Income before income taxes 57,119 65,694 +15.0 614
Income taxes and other 22,975 25,698 +11.9 240
------ ------ ------ ------
Income before cumulative 34,144 39,996 +17.1 374
effect of an accounting change
Cumulative effect of an - (4,713) - (44)
accounting change
------ ------ ------ ------
Net income Y 34,144 Y 35,283 +3.3 $ 330
------ ------ ------ ------
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Sony without Financial 2004 2005 Change 2005
Services %
------ ------ ------ ------
Net sales and operating Y6,939,964 Y6,632,728 -4.4 $ 61,988
revenue
Costs and expenses 6,896,377 6,575,354 -4.7 61,452
------ ------ ------ ------
Operating income 43,587 57,374 +31.6 536
Other income (expenses), net 52,746 40,639 -23.0 380
------ ------ ------ ------
Income before income taxes 96,333 98,013 +1.7 916
Income taxes and other 30,916 (37,043) - (346)
------ ------ ------ ------
Income before cumulative 65,417 135,056 +106.5 1,262
effect of an accounting change
Cumulative effect of an (2,117) - - -
accounting change
------ ------ ------ ------
Net income Y 63,300 Y 135,056 +113.4 $ 1,262
------ ------ ------ ------
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Consolidated 2004 2005 Change 2005
%
------ ------ ------ ------
Financial service revenue Y 565,752 Y 537,715 -5.0 $ 5,025
Net sales and operating 6,930,639 6,621,901 -4.5 61,887
revenue
------ ------ ------ ------
7,496,391 7,159,616 -4.5 66,912
Costs and expenses 7,397,489 7,045,697 -4.8 65,847
------ ------ ------ ------
Operating income 98,902 113,919 +15.2 1,065
Other income (expenses), net 45,165 43,288 -4.2 404
------ ------ ------ ------
Income before income taxes 144,067 157,207 +9.1 1,469
Income taxes and other 53,439 (11,344) - (106)
------ ------ ------ ------
Income before cumulative 90,628 168,551 +86.0 1,575
effect of an accounting change
Cumulative effect of an (2,117) (4,713) - (44)
accounting change
------ ------ ------ ------
Net income Y 88,511 Y 163,838 +85.1 $ 1,531
------ ------ ------ ------
Condensed Statements of Income
------------------------------
(Millions of yen, millions of U.S. dollars)
Three months ended March 31
Financial Services 2004 2005 Change 2005
%
------ ------ ------ ------
Financial service revenue Y 152,141 Y 156,109 +2.6 $ 1,459
Financial service expenses 134,949 139,807 +3.6 1,306
------ ------ ------ ------
Operating income 17,192 16,302 -5.2 153
Other income (expenses), net (92) 450 - 4
------ ------ ------ ------
Income before income taxes 17,100 16,752 -2.0 157
Income taxes and other 7,103 6,841 -3.7 64
------ ------ ------ ------
Net income Y 9,997 Y 9,911 -0.9 $ 93
(Millions of yen, millions of U.S. dollars)
Three months ended March 31
Sony without Financial 2004 2005 Change 2005
Services %
------ ------ ------ ------
Net sales and operating Y1,630,452 Y1,549,209 -5.0 $ 14,479
revenue
Costs and expenses 1,757,683 1,643,498 -6.5 15,360
------ ------ ------ ------
Operating income (loss) (127,231) (94,289) - (881)
Other income (expenses), net 16,551 15,644 -5.5 146
------ ------ ------ ------
Income (loss) before income (110,680) (78,645) - (735)
taxes
Income taxes and other (62,419) (12,285) - (115)
------ ------ ------ ------
Net income (loss) Y(48,261) Y(66,360) - $ (620)
------ ------ ------ ------
(Millions of yen, millions of U.S. dollars)
Three months ended March 31
Consolidated 2004 2005 Change 2005
%
------ ------ ------ ------
Financial service revenue Y 144,679 Y 150,887 +4.3 $ 1,410
Net sales and operating 1,627,512 1,546,134 -5.0 14,450
revenue
------ ------ ------ ------
1,772,191 1,697,021 -4.2 15,860
Costs and expenses 1,881,947 1,774,434 -5.7 16,583
------ ------ ------ ------
Operating income (loss) (109,756) (77,413) - (723)
Other income (expenses), net 16,183 15,520 -4.1 145
------ ------ ------ ------
Income (loss) before income (93,573) (61,893) - (578)
taxes
Income taxes and other (55,418) (5,443) - (50)
------ ------ ------ ------
Net income (loss) Y(38,155) Y(56,450) - $ (528)
------ ------ ------ ------
Condensed Balance Sheets
------------------------
(Millions of yen, millions of U.S. dollars)
Financial Services March 31
ASSETS 2004 2005 2005
------ ------ ------
Current assets:
Cash and cash equivalents Y 256,316 Y 259,371 $ 2,424
Marketable securities 270,676 456,130 4,263
Notes and accounts receivable, 72,273 77,023 720
trade
Other 100,433 197,667 1,847
------ ------ ------
699,698 990,191 9,254
Investments and advances 2,274,510 2,378,966 22,233
Property, plant and equipment 40,833 38,551 360
Other assets:
Deferred insurance acquisition 349,194 374,805 3,503
costs
Other 110,804 103,004 963
------ ------ ------
459,998 477,809 4,466
------ ------ ------
Y3,475,039 Y3,885,517 $ 36,313
------ ------ ------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Short-term borrowings Y 86,748 Y 45,358 $ 424
Notes and accounts payable, 7,847 7,099 66
trade
Deposits from customers in the 378,851 546,718 5,110
banking business
Other 175,357 109,438 1,023
------ ------ ------
648,803 708,613 6,623
Long-term liabilities:
Long-term debt 135,811 135,750 1,269
Accrued pension and severance 10,183 14,362 134
costs
Future insurance policy benefits 2,178,626 2,464,295 23,031
and other
Other 126,349 142,272 1,329
------ ------ ------
2,450,969 2,756,679 25,763
Minority interest in consolidated - 5,476 51
subsidiaries
Stockholders' equity 375,267 414,749 3,876
------ ------ ------
Y3,475,039 Y3,885,517 $ 36,313
------ ------ ------
(Millions of yen, millions of U.S. dollars)
Sony without Financial Services March 31
ASSETS 2004 2005 2005
------ ------ ------
Current assets:
Cash and cash equivalents Y 592,895 Y 519,732 $ 4,857
Marketable securities 4,072 4,072 38
Notes and accounts receivable, 943,590 952,692 8,904
trade
Other 1,151,879 1,116,353 10,433
------ ------ ------
2,692,436 2,592,849 24,232
Film costs 256,740 278,961 2,607
Investments and advances 358,629 445,446 4,163
Investments in Financial Services, 176,905 187,400 1,751
at cost
Property, plant and equipment 1,324,211 1,333,848 12,466
Other assets 1,251,901 1,189,398 11,117
------ ------ ------
Y6,060,822 Y6,027,902 $ 56,336
------ ------ ------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Short-term borrowings Y 409,766 Y 204,027 $ 1,907
Notes and accounts payable, 773,221 801,252 7,488
trade
Other 1,190,563 1,132,201 10,581
------ ------ ------
2,373,550 2,137,480 19,976
Long-term liabilities:
Long-term debt 775,233 627,367 5,863
Accrued pension and severance 358,199 338,040 3,159
costs
Other 348,946 263,520 2,464
------ ------ ------
1,482,378 1,228,927 11,486
Minority interest in consolidated 17,554 18,471 173
subsidiaries
Stockholders' equity 2,187,340 2,643,024 24,701
------ ------ ------
Y6,060,822 Y6,027,902 $ 56,336
------ ------ ------
(Millions of yen, millions of U.S. dollars)
Consolidated March 31
ASSETS 2004 2005 2005
------ ------ ------
Current assets:
Cash and cash equivalents Y 849,211 Y 779,103 $ 7,281
Marketable securities 274,748 460,202 4,301
Notes and accounts receivable, 1,011,189 1,025,362 9,583
trade
Other 1,228,207 1,291,504 12,070
------ ------ ------
3,363,355 3,556,171 33,235
Film costs 256,740 278,961 2,607
Investments and advances 2,512,950 2,745,689 25,661
Property, plant and equipment 1,365,044 1,372,399 12,826
Other assets:
Deferred insurance acquisition 349,194 374,805 3,503
costs
Other 1,243,379 1,171,075 10,945
------ ------ ------
1,592,573 1,545,880 14,448
------ ------ ------
Y9,090,662 Y9,499,100 $ 88,777
------ ------ ------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Short-term borrowings Y 475,017 Y 230,266 $ 2,152
Notes and accounts payable, 778,773 806,044 7,533
trade
Deposits from customers in the 378,851 546,718 5,110
banking business
Other 1,349,574 1,226,340 11,461
------ ------ ------
2,982,215 2,809,368 26,256
Long-term liabilities:
Long-term debt 777,649 678,992 6,346
Accrued pension and severance 368,382 352,402 3,293
costs
Future insurance policy benefits 2,178,626 2,464,295 23,031
and other
Other 382,930 299,858 2,802
------ ------ ------
3,707,587 3,795,547 35,472
Minority interest in consolidated 22,858 23,847 223
subsidiaries
Stockholders' equity 2,378,002 2,870,338 26,826
------ ------ ------
Y9,090,662 Y9,499,100 $ 88,777
------ ------ ------
Condensed Statements of Cash Flows
----------------------------------
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Financial Services 2004 2005 2005
------ ------ ------
Net cash provided by operating Y 241,627 Y 168,078 $ 1,571
activities
Net cash used in investing activities (401,550) (421,384) (3,938)
Net cash provided by financing 141,696 256,361 2,396
activities
------ ------ ------
Net increase (decrease) in cash and (18,227) 3,055 29
cash equivalents
Cash and cash equivalents at beginning 274,543 256,316 2,395
of the fiscal year
------ ------ ------
Cash and cash equivalents at end of Y 256,316 Y 259,371 $ 2,424
the fiscal year
------ ------ ------
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Sony without Financial Services 2004 2005 2005
------ ------ ------
Net cash provided by operating Y 401,090 Y 485,439 $ 4,537
activities
Net cash used in investing activities (352,496) (472,119) (4,412)
Net cash provided by (used in) 153,759 (95,373) (892)
financing activities
Effect of exchange rate changes on (47,973) 8,890 83
cash and cash equivalents
------ ------ ------
Net increase (decrease) in cash and 154,380 (73,163) (684)
cash equivalents
Cash and cash equivalents at beginning 438,515 592,895 5,541
of the fiscal year
------ ------ ------
Cash and cash equivalents at end of Y 592,895 Y 519,732 $ 4,857
the fiscal year
------ ------ ------
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Consolidated 2004 2005 2005
------ ------ ------
Net cash provided by operating Y 632,635 Y 646,997 $ 6,047
activities
Net cash used in investing activities (761,792) (931,172) (8,703)
Net cash provided by financing 313,283 205,177 1,918
activities
Effect of exchange rate changes on (47,973) 8,890 83
cash and cash equivalents
------ ------ ------
Net increase (decrease) in cash and 136,153 (70,108) (655)
cash equivalents
Cash and cash equivalents at beginning 713,058 849,211 7,936
of the fiscal year
------ ------ ------
Cash and cash equivalents at end of Y 849,211 Y 779,103 $ 7,281
the fiscal year
------ ------ ------
Investor Relations Contacts:
Tokyo New York London
Yukio Ozawa Takeshi Sudo/Justin Chris Hohman/Shinji
Hill Tomita
+81-(0)3-5448-2180 +1-212-833-6722 +44-(0)20-7444-9713
Home Page: http://www.sony.net/IR/
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